Odd Rune Straume

TL;DR: In this paper, the effect of competition on quality in hospital markets with regulated prices was analyzed, considering both introducing competition and increasing competition through either lower transportation costs (increased substitutability) or a higher number of hospitals.

TL;DR: It is shown that hospital competition is amplified by higher GP attendance but dampened by improved diagnosing accuracy, therefore, compulsory gatekeeping may result in excessive quality competition and too much specialization, unless the mismatch costs and the Diagnosing accuracy are sufficiently high.

TL;DR: In this article, the authors examine how a downstream merger affects input prices and, in turn, the profitability of a such a merger under Cournot competition with differentiated products, and show that the equilibrium market structure is likely to be characterised by cross-border merger.

Abstract: In a model of spatial competition, we analyze the equilibrium outcomes in markets where the product price is exogenous. Using an extended version of the Hotelling model, we assume that firms choose their locations and the quality of the product they supply. We derive the optimal price set by a welfarist regulator. If the regulator can commit to a price prior to the choice of locations, the optimal (second-best) price causes overinvestment in quality and an insufficient degree of horizontal differentiation (compared with the first-best solution) if the transportation cost of consumers is sufficiently high. Under partial commitment, where the regulator is not able to commit prior to location choices, the optimal price induces first-best quality, but horizontal differentiation is inefficiently high.

TL;DR: The authors analyzed unionized firms' incentives to outsource intermediate goods production to low-cost subcontractors and found that stronger unions, which imply higher domestic wages, reduce incentives for international outsourcing.